South-east Asia's hi-tech and wealthy city-state. Based on banking and financial services; shipyards and oil refining; leading world port in tons of goods transported.

Economic overview

The Singapore economy is characterized by its extreme financialization and high degree of openness, and thus its dependence on international trade. After contracting greatly in 2009 (-0.8%), growth reached the exceptional degree of 14.5 % of the GDP in the following year, boosted by the regional recovery, strong growth in exports and a strong recovery in domestic demand.

Due to supply disruption caused by the Japanese earthquake and the decline in global demand later that year, economic growth in Singapore again deteriorated in 2011-12. It reached 3.5% in 2013, sustained by the manufacturing industry and the recovery in Asian trade. For 2014, the growth is expected to reach around 2-4%.

Singapore's economy is sound: the current account surplus is large and the country has significant foreign exchange reserves with a zero external debt. The country also benefits from a large margin to increase spending on social services and help for local businesses. The government's priority is to ensure quality growth and build a more inclusive society. The 2014-2015 budget emphasizes social spending, with special attention being given to the elderly workers. It contains measures to support SMEs; measures to help the most economically vulnerable who are facing high living costs; measures to facilitate access to healthcare; measures to increase productivity of Singaporean workers and decrese the country's dependency on foreign workforce; and increased taxes on tobacco and alcohol. After a budget surplus of 1.1% of the GDP in 2013/2014, the country should have adeficit of 0.3% of the GDP in 2014-2015. To maintain its competitive position despite rising wages, the government seeks to promote activities with higher added value (such as biotechnology, research and development and pharmaceuticals) in manufacturing and services.

The level of per capita wealth in Singapore is amongst the highest in the region. After a long period of full employment, unemployment has appeared, especially due to structural economic chances (outsourcing of low-skilled work) and worsened during the global economic crisis. However, it has since decreased and now remains at around 2.1% of the active population. Singapore must also deal with rising levels of income inequality and social discontent caused by overpopulation and high level of competition for employment and housing, which are seen to be caused by immigration.

Main industries

Singapore's economy is highly industrialized. The biggest sector is the manufacturing sector, followed by the wholesale and retail sector, business services, transport and communication and financial services. The electronics and petrochemical industries are dominant. The services sector contributes almost three quarters of the GDP and employs over three quarters of the active population. The industrial sector represents a quarter of the GDP. The primary sector is almost nonexistent (except for the cultivation of orchids, vegetables and fish for aquariums). Singapore does not have any mineral resources.

Singapore is a regional trading hub. The Port of Singapore is amongst the world's biggest and is the second traffic center for container transshipment, behind Hong Kong.

Foreign trade overview

A real warehouse and crossroads of international trade, Singapore is highly dependent on external trade, which represents more than 400% of the GDP. The strategy adopted by the country is to promote export while being careful to minimize barriers to imports. Singapore has signed the Asian Free Trade Area agreements (AFTA in the ASEAN context) and several bilateral agreements.

Although the volume of trade diminished in 2012, Singapore shows a large trade surplus, a trend which should continue in the coming years.

FDI

Singapore has based its economic development on a proactive strategy of attracting FDI and trade openness. According to the World Bank, Singapore tops the ranking on Ease of Doing Business. Favorable lending to foreign investors, simple regulatory system, tax incentives, high-quality industrial real estate park, political stability and absence of corruption make Singapore an attractive destination for investment.

According to the UNCTAD 2013 Global Investment Report, Singapore is the 8th largest recipient of FDI in the world, the 3rd largest among countries in East Asia and South-East Asia. In 2013, FDI into Singapore stagnated at the level of 56 billion USD.

The main investors are the United States, the Netherlands, the UK and Japan.